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Cartoon of the Day: The Blame Game

Cartoon of the Day: The Blame Game - Blame cartoon 9 07.17.2015

"The big 'weather bounce' that the U.S. economy was supposed to see in Q2? It simply did not happen," Hedgeye CEO Keith McCullough recently wrote.

 

(Just as we predicted)

 

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RTA Live: July 17, 2015

Here is the replay of today's edition of RTA Live.

 

 


Keith's Daily Trading Ranges [Unlocked]

This is a free look at today's Daily Trading Ranges - our proprietary buy and sell levels on major markets, commodities and currencies sent to subscribers weekday mornings by CEO Keith McCullough. Click here to subscribe.

Keith's Daily Trading Ranges [Unlocked] - Slide1

BULLISH TRENDS

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BEARISH TRENDS

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Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

The Macro Show Replay | July 17, 2015

 


Slow…Halt…Ramp!

Client Talking Points

USD

Mario Draghi did the double-whatever-it-takes yesterday and the Euro dove to the low-end of my immediate-term $1.08-1.11 risk range; that finally puts USD Index immediate-term TRADE overbought in what continues to look like a #deflationary redo for certain asset prices, earnings, etc. 

#DEFLATION

Most obviously you can see this in both commodities themselves this week and their equity market links – Copper and Russia (stocks) both down -0.5-1% again this morning and a lot of these things are close to 3 month lows with USD at 3 month highs.

EQUITIES

European and Chinese halts worked (Greece is still halted) and the U.S. Equity ramp came right after S&P 500 (Index + Emini) net SHORT position (CFTC futures/options contracts) peaked at -162,467 at the July U.S. equity market low! Risk ranges are now as wide as they’ve been all year.

 

**The Macro Show - CLICK HERE to watch Hedgeye CEO Keith McCullough and Macro Analyst Christian Drake.

Asset Allocation

CASH 56% US EQUITIES 2%
INTL EQUITIES 5% COMMODITIES 0%
FIXED INCOME 27% INTL CURRENCIES 10%

Top Long Ideas

Company Ticker Sector Duration
GIS

General Mills remains on the Hedgeye Consumer Staples Best Ideas list as a LONG. GIS has a lot of things going for it and they are going to show it in the top and bottom line this year. Over the last couple of months, the company has announced the removal of artificial colors and flavors from their cereals. More recently, they have committed to using only cage-free eggs.  Many of these small actions that management is taking are going to have a snowball effect as they go throughout FY16. Below is a list of some of the biggest things that we are looking forward to this year:

  1. Yoplait in China
  2. Gluten-Free Cheerios
  3. No artificial colors or flavors in the cereal
  4. Granola innovation / Muesli
  5. Greek Plenti / Whips
  6. Original yogurt sugar reduction
  7. Renovation on Grain Snacks
  8. Strong push on Natural & Organic products
  9. Delivering Value to consumer on brands like Totino’s and Hamburger Helper
  10. Bringing U.S. innovation International
PENN

Gaming, Lodging and Leisure Sector Head Todd Jordan reiterates his team's bullish high-conviction thesis on Penn National Gaming. The company remains one of our favorite names on the long side and boasts the best new unit growth story in domestic gaming. Jordan further notes that with more states releasing their June gaming revenues this past week, we feel more confident in our higher than consensus Revenue, EBITDA, and EPS estimates.

TLT

Long-term Treasury rates remain the best proxy for forward-looking growth expectations. We outline three components of secular stagnation below to explain the SAVINGS/INVESTMENT GLUT that is at the heart of the academic argument for current policy measures:

  1. Negative demographic trends globally (decline in population growth and aging population)
  2. Reduced capital intensity in leading industries (think of the capital and labor required to start Facebook over U.S. Steel)
  3. Falling relative prices of capital goods       

Three for the Road

TWEET OF THE DAY

Greece keeping the stock market (and banks) closed until next wk - should be interesting when they open...

@KeithMcCullough

QUOTE OF THE DAY

A great man is always willing to be little.

Ralph Waldo Emerson

STAT OF THE DAY

Since peaking on June 12th the Shanghai and Shenzhen Composite indices have lost -26% and -33%, respectively. That equates to a combined loss of over $3.2 trillion.


CHART OF THE DAY: The Risk Of Raising Rates Right Now

Editor's Note: Below is an excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. If you're interested in getting a step ahead of consensus each morning click here to learn more. 

 

CHART OF THE DAY: The Risk Of Raising Rates Right Now - z chart of day 07.17.15 chart

 

...Not only are whoever these “economists” are now completely ignoring Mr. Macro Market’s opinion (Fed Fund Futures imply less than a 15% chance of a SEP hike), but they are at complete odds with me on the risk of raising rates into a slowdown.

 

At least since the last two Wall Street tops (2000 and 2007), the Fed has only eased during slowdowns. Remember the man before Draghi at the ECB helm, Jean-Claude Trichet? He raised rates in 2011 and pretty near blew up the capital market world.

 

Ah, what do I know about buying cyclicals and/or tightening at the end of a cycle? It’s probably different this time. Post a 6yr equity ramp shouldn’t you pay 351x earnings for Netflix or chase QQQs?

 

I’m hearing the charts “look good.” They did in 2000 and 2007 too.

 


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